BuyImproveSell

Strictly private and confidential

BuyImproveSell

Melrose Industries PLC

19 November 2019

Investec conference

BuyImproveSell

Contents

1 Melrose

2 GKN Aerospace

3 GKN Automotive

4 GKN Powder Metallurgy, Nortek Air & Security and Other Industrial

5 Working Capital

6 Closing Summary

1

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Melrose has c.50 employees based in London, Birmingham and Atlanta, US

How Melrose creates value

1. Based on total shareholder return up to 31 December 20182. Comprises McKechnie/Dynacast, FKI and Elster 2

GKN has the same characteristics as the previous successful acquisitions

Identify underperforming industrial assets1

Buy at an appropriate price, disciplined approach 2

Improve business performance through clear strategy and investment led by chosen, incentivised management team

Melrose oversees this improvement over the three to five-year investment horizon

3

Sell to new owner a more profitable and a better cash generating asset

4

Return cash to our shareholders5

Melrose business model is simple and successful through many cycles

£1Invested on the first

deal in 2005

Average annual return for a shareholder since the first deal

Average return on equity

across all three2

exited acquisitions

£17.85 today1

23.6%1

2.6x

Melrose performanceMelrose approach

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The previous results

(>30% improvement)(>70% improvement)

(>40% improvement)(>40% improvement)

McKechnie +6pptsElster +9pptsDynacast +5pptsFKI +4ppts

(>60% improvement)

Nortek +6ppts

1

Melrose operating margin improvement

1. Nortek operating profit margin up to 31 December 2018

Elster Nortek

Returns on capex andrestructuring and othercommercial actions

Central costsavings

Exit of low marginsales channels

+9ppts

+6ppts

+1ppt

+1ppt

+4ppts

+6ppts

+1ppt

+2ppts

How Elster and Nortek operating margin improved

Increase in operating margin of between 4 and 9 percentage points Achieved through investing in the businesses to improve efficiency

and quality

Operating margins always improved through investment and management actions

3

18%

24%

13%

22%

11%

16%

10%

14%

9%

15%

Entry Current Exit

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GKN Aerospace

4

34% of Melrose1

1. Based on adjusted first half 2019 operating profit for all businesses

1

2

Revenue by market

1 Commercial (71%)

2 Military (29%)

4 RoW (1%)

12

3

Revenue by destination

1 North America (57%)

2 Europe (38%)

3 Asia (4%)

4

1

2

3

Revenue by product type

1 Aerostructures (63%)

3 Special Technologies (5%)

2 Engine Systems (32%)

4 RoW (1%)

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A leading global tier one Aerospace supplier

Aerostructures Special Technologies Engine Systems

5

Strong focused businesses

63% £2.2 billion

(£0.6 billion North America)

32% £1.1 billion

5% £0.2 billion

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1 Commercial (71%)

2 Military (29%)

A global business with £3.5bn sales to blue chip customers

6

Sales by market

We provide vital technology to an enviable portfolio of global customers

1

2

3

4567

10

GKN Aerospace has great core strengths

Global #2 by revenue in Aerostructures and Aero Engines. Aero Engines has very positive longer term cash flow dynamics

Attractive specialist positions in niche markets

Differentiating technologies, including additive manufacturing, supplied to an unrivalled breadth of customers

Positioned alongside our customers, across 3 continents

51sites across

15countries

4 R&D centres

Approximately

17,000people (FTEs)

1

2

Sales by customer

1 Airbus (19%)2 Boeing (11%)3 UTC (11%)4 GE (8%)5 Lockheed (7%)6 Rolls-Royce (5%)7 Safran (4%)8 Gulfstream (3%)9 Honeywell (3%)10 Others (29%)

1

2

3

4567

10

89

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Aerospace – trading

Creation of ‘One GKN Aerospace’; major new operational improvement programme announced:

− Business refocused to better serve customers

− Operational excellence – many initiatives underway, supported by the recently announced new operating model

Continued investment in new facilities:

− Fan blade repair centre in Malaysia

− Wiring facility in India

− State-of-the-art advanced composites manufacturing facility in Florida, USA

Record investment in technology:

− Work has started on the new Global Technology Centre in Bristol, UK

− World leading additive manufacturing pilot production cell at Oak Ridge National Laboratory, US

− Technology centre in the Netherlands to focus on thermoplastic components

− Manufactured first components for the Wing of Tomorrow programme

Delivery, quality and customer relationships all improving

New target to improve trade working capital, particularly inventory

Good progress being made on resolving loss-making contracts

Direct and indirect procurement improvements

Significant capital investment to previously underinvested parts of the business and to new growth areas

Investment and restructuring

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Margin improvement

Margin improvement only requires limited sales growth, therefore the required actions are largely within our control

Strongly positioned – great technology and footprint will enable us to grow

12%Margin target under Melrose

ownership

1. Excludes the positive impact of the required IFRS accounting for loss-making contracts

1

Aerospace margin improvement

8.2%

12%

2018operating

margin

Targetoperating

margin

£70m+opportunity

£40m+opportunity

£40m+ opportunity

Procurement

Operational excellence

(including fixing North America)

SG&A focus

Net savings

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GKN Automotive

9

33% of Melrose1

1. Based on adjusted first half 2019 operating profit for all businesses

Revenue by product type

1

2

341 Driveline (73%)

3 eDrive (1%)2 All Wheel Drive (25%)

4 Cylinder Liners (1%)

Revenue by destination

1

2

3

4

1 Europe (36%)

3 Asia (15%)2 North America (36%)

4 China (13%)

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1 Customer A (16%)

2 Customer B (13%)

3 Customer C (13%)

4 Customer D (9%)

5 Customer E (9%)

6 Customer F (7%)

7 Customer G (5%)

8 Customer H (5%)

9 Customer I (5%)

10 Customer J (5%)

11 Customer K (3%)

12 Customer L (2%)

13 Others (8%)

Balanced business across products, regions and customers

Product mix1

1. Includes JVs at GKN Automotive percentage share2. Includes Niche, Motorsports and Aftermarket (NMA)3. All Wheel Drive4. Excludes NMANote: The above does not include the Cylinder Liners business (included in the Automotive Division in the Melrose Financial Statements)

Customer mix1,4Regional mix1,4

Strong mix of conventional and new technologies

Largest customer at 16% of sales

Improving alignment to global production

Globally balanced business

10

1 Driveshafts² (62%)

2 Propshafts (11%)

3 AWD³ (26%)

4 eDrive (1%)

1

2

3

4

1 Europe (36%)

2 Americas (36%)

3 Asia-Pacific (15%)

4 China (13%)

1

2

3

4 1

2

3

456

78

910

131211

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Global leader

1. Figures shown are for Driveshafts only2. Figures shown are for Power Transfer Units/AWD Final Drive Units 3. Figures are for P4 eDrives 4. On cumulative deliveriesNote: Figures calculated on addressable market only (in-house production excluded)

Driveline1

All Wheel Drive (AWD)2

eDriveSystems3

GKN Automotivemarket share

47% (#1)>82m driveshafts delivered in 2018

30% (#1)>2.9m AWD unitsdelivered in 2018

14% (#14 )>850,000 eDrive systems cumulative deliveries

Competitor market shares

2018 sales

£4.9bn

Competition fragmented

Key competitors

Leading player with significant scale, excellent market share

20%

8% 6% 4%

Competitor 1 Competitor 2 Competitor 3 Competitor 4

16% 15%

8% 8%

Competitor 1 Competitor 2 Competitor 3 Competitor 4

11

Source: IHS

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Automotive – trading

Significant restructuring programmes underway:

− Layers of management removed

− Structural reductions in fixed costs

− Early retirement programmes initiated at several plants

− Footprint reduction taking place

Focus on improving production flows

Direct and indirect procurement improvements

eDrive continues to grow:

− Development of market leading technology

− Capital investments to increase specific eDrive manufacturing capacity

Good progress being made on resolving loss-making contracts

Investment and restructuring

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Revenue

1. 2007 = 100; Includes ~100 best performing auto suppliers across all regions2. 2007 = 100; Trading profit used for 2007-2017, excluding amortisation of acquisition-related intangibles3. Excludes joint ventures

1 2,3

Operating profit margin

GKN only did limited cost base restructuring in 2009, presents significant opportunity

2.31.8

2.83.4 3.5

4.9 4.9

2007 2009 2011 2013 2015 2017 2018

Revenue GKN Automotive (£bn)

13

100

45

110 113 126 133 128

100

(6)

75 77 91 84 76

2007 2009 2011 2013 2015 2017 2018

Operating profit margin Industry (Indexed) Operating profit margin GKN Automotive (Indexed)

Major opportunity for margin improvement

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2018operating

margin

Targetoperating

margin

6.7%

10%

New path forward for GKN Automotive

1. Excludes the positive impact of the required IFRS accounting for loss-making contracts. Includes the Cylinder Liners business

Changing focus from sales to profitability

Key elements of the plan

14

Focus on selective, profitable growth

Expand leading position in ePowertrain

Drive operational performance in our Driveline business

Rigorous focus on lean, reactive and high performing business model

Target margins

1

£200m+opportunity

£50m+opportunity

£75m+ opportunity

Operational excellence

Procurement optimisation

Fixed costs reduction

Gross savings

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Powder Metallurgy, Nortek Air & Security and Other Industrial

15

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Powder Metallurgy, Nortek Air & Security and Other Industrial

16

Powder Metallurgy

Continued investment in additive manufacturing technologies

Footprint consolidation underway

Focus on increasing market share based on leading positions and service offerings

Targeted cost reduction actions

New plant in Guanajuato, Mexico opening October 2019

Nortek Air & Security

Significant investment in StatePoint Technology® liquid cooling system and accompanying factory footprint expansion; marginheadwind due to expensing initial investment in StatePoint Technology® which accounts for a quarter of the profit decline

Footprint consolidation within the core Air Management business

Security & Smart Technology production location moving to mitigate the impact of US tariffs

Other Industrial

Ergotron market impacted by US tariffs on Chinese goods. New product launches underway

Revenue and operating profit decline in Wheels & Structures from the challenges created by significant over investment prior toacquisition, which heavily disrupted the business

Management change in Wheels & Structures enacted to improve operational efficiencies in the UK and bed-in the new investment,good upside potential

Brush smaller but profitable, restructuring substantially completed to plan

Investment and restructuring

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GKN Working Capital

17

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GKN working capital – cash release of £400 million

Pre-Melrose situation New approach Opportunity for improvement

Inventory • Not centrally reviewed previously

• Excess stock due to quality issues

• High work in progress due to inefficient production flows

• Inaccurate demand forecasting

• Build to order

• Supply chain fulfilment driven by demand ‘pull’

Receivables • Inconsistent terms

• Unstructured approach to cash collection

• Invoice disputes

• Terms embedded into commercial negotiations

• Collections rigour throughout year,reduced past dues

Payables • Creditor squeezes at period close • Structural procurement negotiations

• Paying on time

Targeting £400 million of additional future free cash within our ownership period

Represents c.10% of GKN gross trade working capital1 balances

Largest opportunity from reducing GKN net inventory of £1.2 billion

1. Inventory plus trade receivables plus trade payables

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Closing Summary

19

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Closing summary

Historical operational problems and programme underperformance are fixable. These challenges are not new to us2

GKN Aerospace and Automotive are attractive, well positioned businesses1

Melrose is confident of delivering significantly improved margin performance. Margin improvement only requires limited sales growth, therefore the required actions are largely within our control

3

• Aerospace: 12% • Automotive: 10%• Powder Metallurgy: 14%

Our operating margin targets are realistic4

GKN is on track to be another successful Melrose acquisition

20

These targets equate to a blended GKN operating margin of >11%, higher than the >10% promised on acquisition5